Fast, actionable advice from Founders, CEOs, and Investors

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.) Everything you ever wanted to know about advisors, Part 2 – Venture HacksWhat should I pay advisors?
Nothing—get them to pay you. Ask advisors to invest. You get money, save stock, and amplify the advisor’s social proof in the process. But lots of good advisors can’t or won’t invest

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.) Everything you ever wanted to know about advisors, Part 2 – Venture HacksThe normal advisor gets 0.1%-0.25% of a company’s post-Series A stock. Normal advisors do something important for the company and aren’t expected to do much beyond that. For example, they introduce the company to a key customer or investor.
Normal advisors are also assembled by naive entrepreneurs who think the mere presence of an advisory board will create social proof and help them raise money. But investors don’t take these mock advisory boar… (read more)

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.) Everything you ever wanted to know about advisors, Part 2 – Venture HacksThe super advisor can get as much stock as a board member: 1%-2% of a company’s post-Series A stock. Super advisors help make your company happen. They know all your prospective customers intimately. Or they raise your money for you. Or they bring you a handful of great employees. They can even add more value than an independent board member because they don’t have to deal with corporate governance.
If you find a super advisor, you want to incent… (read more)

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.) Everything you ever wanted to know about advisors, Part 2 – Venture HacksWhether you’re hiring a normal advisor or super advisor:
Advisory shares are usually issued as common stock options.
The options typically vest monthly over 1-2 years with 100% single-trigger acceleration and no cliff. Although the advisor is on a vesting schedule, you should expect them to add most of their value up-front—that’s normal.
Many advisors want options they can exercise immediately—that’s fine.
If your company hasn’t raised a Seri… (read more)

Babak Nivi (Co-founder of AngelList and Venture Hacks. Previously, he was an entrepreneur-in-residence at Bessemer Venture Partners and Atlas Venture.) Everything you ever wanted to know about advisors, Part 2 – Venture HacksAngels or seed investors may ask for advisory shares. They might argue that they will be more helpful than the other investors, so they should get advisory shares.
But every investor thinks he will add more value than the other investors. We would like to propose a shareholder’s code of conduct: if you think you’re doing too much, you’re probably just doing your share.
So, how do you decide whether you should give advisory shares to an investo… (read more)

FounderDating (Network of talented entrepreneurs with different backgrounds and skill sets all ready to start their next company or project) | FounderDatingWhy do I have to give equity, can’t we pay cash?
Advisors, the way we’re defining them, are individuals that are able to give strategic advice based on experience as entrepreneurs, executives and/or deep expertise in a certain area. Your incentives should be aligned around growing the company and equity is the best way to do this. There is nothing wrong with project-based on hourly consultants, but FD:Advisors and this agreement does not serve t… (read more)

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital) Should you give advisors equity in your startup? | Calacanis.comAdvisors ask founders to trade “advice” and “work” in exchange for equity. Founders who haven’t raised money yet typically get advisors because, well, they are unable to get investors!
Cynics (typically VCs) say things like, “if you could get investors — who advise for free — why would you get advisors who don’t put any cash at risk? Those people are not earning their equity!”
The cynical folks are right 80% of the time — the advisors don’t earn … (read more)

Jason Calacanis (CEO of Inside.com, Formerly “Entrepreneur in Action” at Sequoia Capital) Should you give advisors equity in your startup? | Calacanis.comVest the shares the advisor will receive over two years (you won’t need them longer than that).
Typically they get .25 to .50 points in a startup — one point is they are a complete hero.
Put a dollar value on that equity. If you give .50 in a company worth $10m that’s $50,000 — not a ton of money depending on what they do.
Write a letter of agreement for what they will do for that equity. This should be as detailed as possible: e.g., the advis… (read more)

Steve Hoffman (Cofounder of LavaMind) How much equity do I give to my Board of Advisors? | Founders SpaceI agree the typical range is between 0.01% to 3%, depending on experience and other assets the advisor brings. It also depends on what stage your company is at. 1% of a startup without VC funding is very different from 1% of a later stage startup with VC funding. The % depends in large part on the valuation and prospects of the company.

Steve Hoffman (Cofounder of LavaMind) How much equity do I give to my Board of Advisors? | Founders SpaceAnother good idea is to tie additional equity to goals. For example, you could give all your advisors 0.25% to begin with, and if they hit certain goals, like making 5 or more key introductions a month, then after the first year they get an additional 0.25%. This way you motivate your advisors to really perform.